What changed in this filing

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Item 1. Business

2024-01-25 compared with 2023-01-26 · 45 added, 51 removed, 157 unchanged (38% of the section changed)

4 unchanged sentences

Additional facilities are based in Australia, Central America, Thailand and South Africa.

On December 30, 2020, we completed the purchase of FONA International, LLC and certain of its affiliates (FONA), a privately held company.

The purchase price was approximately $708 million, net of cash acquired.

FONA is a leading manufacturer of clean and natural flavors providing solutions for a diverse customer base across various applications for the food, beverage and nutritional markets.

The acquisition of FONA broadens our value-add offerings with products that are highly complementary to our existing portfolio.

By combining the portfolios and infrastructures, we have added manufacturing capacity as well as greater scale and expect to accelerate our global flavor growth.

At the time of the acquisition, annual sales of FONA were approximately $114 million.

The results of FONA’s operations have been included in our financial statements as a component of our flavor solutions segment from the date of acquisition.

On November 30, 2020, we completed the purchase of the parent company of Cholula Hot Sauce ® (Cholula) from L Catterton.

The purchase price was approximately $801 million, net of cash acquired.

Cholula, a premium Mexican hot sauce brand, is a strong addition to our global branded flavor portfolio, which broadens our offerings in the high growth hot sauce category to consumers and foodservice operators and accelerates our condiment growth opportunities with a complementary authentic Mexican flavor hot sauce.

At the time of the acquisition, annual sales of Cholula were approximately $96 million.

The results of Cholula’s operations have been included in our financial statements as a component of our consumer and flavor solutions segments from the date of acquisition.

Business Segments

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In the Europe, Middle East and Africa (EMEA) region, our major brands include the Ducros ® , Schwartz ® , Kamis ® and La Drogheria ® brands of spices, herbs and seasonings and an extensive line of Vahiné ® brand dessert items.

In China, we market our products under the McCormick and DaQiao ® brands.

In Australia, we market our spices and seasonings under the McCormick brand, our dessert products under the Aeroplane ® brand, and packaged chilled herbs under the Gourmet Garden brand.

Elsewhere in the Asia/Pacific region, we market our products under the McCormick brand as well as other brands.

In the Asia/Pacific (APAC) region, we market our products under the McCormick and DaQiao ® brands.

In China, we market our spices and seasonings under the McCormick brand, our dessert products under the Aeroplane ® brand, and packaged chilled herbs under the Gourmet Garden brand.

In Australia and elsewhere in the APAC region, we market our products under the McCormick brand as well as other brands.

Approximately two thirds of our consumer segment sales are spices and seasonings and condiments and sauces.

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In the condiments and sauces category, we are one of the brand leaders globally and in the U.S.

are numerous competitive brands of spices and seasonings, and condiments and sauces in the U.S.

There are numerous competitive brands of spices and seasonings, and condiments and sauces in the U.S.

and additional brands in international markets.

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We supply food manufacturers and foodservice customers with customized flavor solutions, and many of these customer relationships have been active for decades.

Our range of flavor solutions remains one of the broadest in the industry and includes seasoning blends, spices and herbs, condiments, coating systems and compound flavors.

Our range of flavor solutions remains one of the broadest in the industry

and includes seasoning blends, spices and herbs, condiments, coating systems and compound flavors.

In addition to a broad range of flavor solutions, our long-standing customer relationships are evidence of our effectiveness in building customer intimacy.

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Raw Materials

The most significant raw materials used in our business are dairy products, pepper, onion, capsicums (red peppers and paprika), garlic, wheat products, vegetable oils, and vanilla.

The most significant raw materials used in our business are dairy products, pepper, onion, garlic, capsicums (red peppers and paprika), tomato products, salts, and wheat products.

Pepper and other spices and herbs are generally sourced from countries other than the United States.

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In addition, we rely on third-party transportation providers to deliver raw materials as well as our products to our customers.

Reduced availability of transportation capacity due to labor shortages and higher fuel costs has caused an increase in the cost of transportation for us and our suppliers.

There has been, and there could continue to be, reduced availability of transportation capacity due to labor shortages and higher fuel costs that has and may continue to cause an increase in the cost of transportation for us and our suppliers.

Our products are sold directly to customers and also through brokers, wholesalers and distributors.

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We have a large number of customers for our products.

Sales to one of our consumer segment customers, Wal-Mart Stores, Inc., accounted for approximately 12% of consolidated sales in 2022, 11% of consolidated sales in 2021 and 12% of consolidated sales in 2020.

Sales to one of our flavor solutions segment customers, PepsiCo, Inc.,

accounted for approximately 11% of consolidated sales in 2022, 2021 and 2020.

Sales to one of our consumer segment customers, Wal-Mart Stores, Inc., accounted for approximately 12% of consolidated sales in 2023 and 2022, and 11% of consolidated sales in 2021.

Sales to one of our flavor solutions segment customers, PepsiCo, Inc., accounted for approximately 13% of consolidated sales in 2023 and 11% of consolidated sales in 2022 and 2021.

In 2023, 2022 and 2021, the top three customers in our flavor solutions segment represented between 47% and 49% of our global flavor solutions sales.

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We have various employee ambassador groups that provide a supportive, collaborative space for employees to come together to promote inclusion.

We prioritize the mental health and

wellness of our employees by offering and encouraging participation in various programs and initiatives.

We prioritize the mental health and wellness of our employees by offering and encouraging participation in various programs and initiatives.

Respect for human rights is fundamental to our business and its commitment to ethical business conduct.

We had approximately 13,800 full-time employees worldwide as of November 30, 2023.

Our operations have not been affected significantly by work stoppages, other than those associated with temporary closures of plants related to the COVID-19 pandemic, and, in the opinion of management, employee relations are good.

Our operations have not been affected significantly by work stoppages, and, in the opinion of management, employee relations are good.

We have approximately 400 employees in the United States who are covered by a collective bargaining contract.

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Information about our Executive Officers

In addition to the executive officers indicated in the 2023 Proxy Statement incorporated by reference in Part III, Item 10 of this Report, the other executive officer of McCormick is Sarah Piper.

Piper is 46 years old and has held the position of Chief Human Relations Officer since December 2022.

Starting in 2017, Ms.

Piper served as Vice President of Total Rewards.

In 2020, she assumed the role of Vice President, Human Relations for the Americas.

Prior to holding her most current position, she served as Senior Vice President, Global Human Relations Business Partners where she was responsible for leading the global HR Business Partner organization to deliver human capital strategies.

In addition to the executive officers indicated in the 2024 Proxy Statement incorporated by reference in Part III, Item 10 of this Report, the other executive officers of McCormick are Andrew D.

Foust, Katherine A.

Jenkins, and Ana G.

Foust is 43 years old and, during the last five years, has held the following positions with McCormick:

December 2021 to present - President, Americas;

February 2020 to November 2021 – President, U.S.

Consumer Products Group;

and July 2018 to January 2020 - Vice President Marketing, U.S.

Consumer Products Group.

Jenkins is 55 years old and, during the last five years, has held the following positions with McCormick:

June 2023 to present - Chief Growth Officer;

June 2022 to May 2023 – Chief Strategy Officer & Senior Vice President, Investor Relations;

and January 2017 to June 2022, Vice President, Investor Relations.

Sanchez is 48 years old and, during the last five years, has held the following positions with McCormick:

February 2022 to present - President, EMEA;

February 2020 to January 2022 – Vice President Consumer, EMEA, and November 2018 to January 2020 – Vice President Marketing, EMEA.

Operations Outside of the U.S.

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Forward-Looking Information

Certain statements contained in this report, including statements concerning expected performance such as those relating to net sales, gross margin, earnings, cost savings, transaction and integration expenses, special charges, acquisitions, brand marketing support, volume and product mix, income tax expense, and the impact of foreign currency rates are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.

Certain statements contained in this report, including statements concerning expected performance such as those relating to net sales, gross margin, earnings, cost savings, special charges, acquisitions, brand marketing support, volume and product mix, income tax expense, and the impact of foreign currency rates are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended.

These statements may be identified by the use of words such as “may,” “will,” “expect,” "should," "anticipate," "intend," “believe” and “plan” and similar expressions.

These statements may relate to:

the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees;

disruptions or inefficiencies in the supply chain, including any impact of COVID-19;

the expected results of operations of businesses acquired by the Company;

the expected impact of the inflationary cost environment, including commodity, packaging materials and transportation costs on our business;

general economic and industry conditions, including consumer spending rates, recessions, interest rates, and availability of capital;

expectations regarding sales growth potential in various geographies and markets, including the impact from brand marketing support, product innovation, and customer, channel, category, heat platform and e-commerce expansion;

expected trends in net sales and earnings performance and other financial measures;

the expected impact of pricing actions on the Company's results of operations and gross margins;

the impact of price elasticity on our sales volume and mix;

the expected impact of factors affecting our supply chain, including transportation capacity, labor shortages, and absenteeism;

the expected impact of productivity improvements, including those associated with our Comprehensive Continuous Improvement (CCI) program, streamlining actions, including our Global Operating Effectiveness Program (GOEP) and global enablement initiative;

the impact of the ongoing conflict between Russia and Ukraine, including the potential for broader economic disruption;

the expected impact of the inflationary cost environment on our business;

the expected impact of factors affecting our supply chain, including the availability and prices of commodities and other supply chain resources including raw materials, packaging, labor energy, and transportation;

the expected impact of productivity improvements, including those associated with our CCI and GOE programs and Global Business Services operating model initiative;

the ability to identify, attract, hire, retain and develop qualified personnel and develop the next generation of leaders;

the impact of the ongoing conflicts between Russia and Ukraine and Israel and Hamas, including the potential for broader economic disruption;

expected working capital improvements;

expectations regarding growth potential in various geographies and markets, including the impact from customer, channel, category, and e-commerce expansion;

expected trends in net sales and earnings performance and other financial measures;

the expected timing and costs of implementing our business transformation initiative, which includes the implementation of a global enterprise resource planning (ERP) system;

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the impact of foreign exchange fluctuations;

the adequacy of internally generated funds and existing sources of liquidity,

such as the availability of bank financing;

our ability to obtain additional short- and long- term financing or issue additional debt securities;

the adequacy of internally generated funds and existing sources of liquidity, such as the availability of bank financing;

the anticipated sufficiency of future cash flows to enable the payments of interest and repayment of short- and long-term debt, working capital needs, planned capital expenditures, quarterly dividends and our ability to obtain additional short- and long- term financing or issue additional debt securities;

and expectations regarding purchasing shares of McCormick's common stock under the existing repurchase authorization.

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increased private label use;

the company's ability to drive productivity improvements, including those related to our CCI program and streamlining actions, including our GOEP;

the company's ability to drive productivity improvements, including those related to our CCI program and streamlining actions, including our GOE program;

product quality, labeling, or safety concerns;

negative publicity about our products;

actions by, and the financial condition of, competitors and customers;

actions by, and the financial

condition of, competitors and customers;

the longevity of mutually beneficial relationships with our large customers;

the ability to identify, interpret and react to changes in consumer preference and demand;

business interruptions due to natural disasters, unexpected events or public health crises, including COVID-19;

business interruptions due to natural disasters, unexpected events or public health crises;

issues affecting the company's supply chain and procurement of raw materials, including fluctuations in the cost and availability of raw and packaging materials;

labor shortage, turnover and labor cost increases;

the impact of the ongoing conflict between Russia and Ukraine, including the potential for broader economic disruption;

the impact of the ongoing conflicts between Russia and Ukraine and Israel and Hamas, including the potential for broader economic disruption;

government regulation, and changes in legal and regulatory requirements and enforcement practices;

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foreign currency fluctuations;

the effects of increased level of debt service following the Cholula and FONA acquisitions as well as the effects that such increased debt service may have on the company's ability to borrow or the cost of any such additional borrowing, our credit rating, and our ability to react to certain economic and industry conditions;

risks associated with the phase-out of LIBOR;

the effects of our amount of outstanding indebtedness and related level of debt service as well as the effects that such debt service may have on the company's ability to borrow or the cost of any such additional borrowing, our credit rating, and our ability to react to certain economic and industry conditions;

impairments of indefinite-lived intangible assets;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business